Why is it taking so long for pharma to change business models?
Nov/10/2007 11:28 Filed in: Pharma
Business
The primary aspect of trends is that they don't happen over night, it is an evolution of a lot of factors that converge. Business leaders that have their fingers on the pulse of trends and can react with speed are the ones that tend to succeed while those that take a wait and see approach often fail. Pfizer's new CEO, who came from the fast food industry, is trying to change the culture of the drug giant. He killed Exubera and has come to realize that having 4 different Pfizer sales reps call on the same doctor is not acceptable. Instead of addressing these changes a Lilly executive would rather talk about message board for sales people? This is indicative of the slow transformation of pharma companies to new business models.
Here are some trends that I believe will demand that the current business model be modified for pharma companies:
1. Sales force is becoming less effective- Drop the samples and leave is not financially sustainable anymore for pharma. Sales people are becoming less and less effective yet there are still way too many sales people out there calling on physicians.
2. Physicians business model is changing: Some health care providers are grading physicians now and Aetna has even started to ask doctors to spend more time with patients at a time when they have to see more patients to make ends meet. Pharma needs to become a partner with physicians and explore methods to solidify the physician-patient relationship.
3. DTC, who cares: TV is more expensive and fragmented than ever yet pharma wastes millions of dollars on TV and then alters data to show it had an impact while ignoring consumer media on the Web. Anyone who thinks that people are going to see a commercial and then ask their physician for the product without doing research is living in the past. Byetta continues to advertise even thought there is a lot of buzz around pancreatitis and Enbrel lists, in their fair balance, death as a potential side effect? It's time to reach out to the influencers but pharma has NO idea on how to do this and is not willing to experiment.
4. Transparency at every level: Pharmaceutical companies are about as transparent as block of cement.
5. Smaller is better: Time to stop adding people to do jobs that one person can do. Smaller teams are more effective than large ones and can react with speed to changing market conditions.
6. CEO's need to stop cuddling with Wall Street: If a drug company develops a pipeline that is sustainable then sales and profits will follow. The problem is that Wall Street is not interested in "the future" they are interested in NOW. CEO's should be compensated in base salaries that are no more than $750,000 at maximum with the rest of the compensation package tied to company performance in key areas like product development, talent retainment and cost controls.
7. Talent: Hire more people that take risk and are willing to speak out and beware of people that conform to the organization. Change is needed in this economy and people that are willing to conform are people that are only interested in collecting paychecks.
8. Admit it ! Admit that patients have more power over their health care choices and embrace it. Look for opportunities to reach out to these patients on THEIR terms not on yours. You don't control the marketing message anymore.
Finally, if the FDA won't act then pharma needs to act on its own behalf. When new drugs are approved pharma should include the following warning on all it's DTC and patient education and labeling:
This is new product that was approved for use by the FDA in 2007. As with all new products that are approved by the FDA we conduct ongoing clinical trials to ensure this products safety and efficacy with long term use. You can view newly reported side effects of this medication at www.brand.com/updates. If you should ever have issues or questions with our product remember your health care professional is always your best source of information but you can contact us at 1-800-888-9000.
Sounds simple ha? Yet I believe most pharma companies would cringe at such a warning. Too bad because it would be a courageous step.
|